By Gunjan Banerji

Wall Street braced Thursday for its most eventful day in years, after the aggressive U.S. tariff plan rattled global markets and put the post-Covid bull market on watch.

Money managers and financial advisers were racing to reassure clients following overnight declines in overseas stocks and U.S. futures of as much as 6%. Analysts were scrutinizing trading in gold, which surged recently to a record before slipping, as well as Treasurys, whose yields fell to their lowest level this year, a sign of deep concern about the health of the world economy.

"I'm bewildered," said Sarah Ketterer, chief executive and portfolio manager at Causeway Capital Management. "We're sailing into some seriously uncharted waters."

U.S. stocks opened sharply lower, with the S&P 500 and the Nasdaq Composite indexes down by more than 3%. The S&P 500, now down around 11% from its record high, is on track to close at a new 2025 low.

The Russell 2000 index of smaller, more economically sensitive companies flirted with a bear market, a loss of more than 20% from its high.

Major stock indexes in Japan, Hong Kong and Europe also traded lower. The U.S. dollar sank more than 2% against the euro, Japanese yen and Swiss franc. Oil prices crashed and were on track for their worst day since 2022, when a spike after Russia's invasion of Ukraine was unwinding.

The market began to turn down midway through President Trump's hourlong speech from the White House Rose Garden, just as he revealed a wave of across-the-board tariffs against the rest of the world. The levies, he said, were pegged to the amounts that those countries imposed on the U.S. China, for one, would be hit by a new 34% tariff. Japan will be taxed 24% starting later this month, with the European Union facing a 20% tariff.

Some of the largest U.S. companies, including Apple, Amazon and Nike, were among those stocks that fell the most in early trading. Apple shares plunged 9% and were on track for their biggest one-day decline since March 2020. Nike and Amazon lost 12% and 7%, respectively.

President Trump's trade war might pose the stiffest test to the stock market's resilience since the financial crisis of 2008-09. Since then, stocks have largely gone in one direction -- up -- and many individual and institutional investors alike have steadily bought small dips in the market.

Markets quickly rebounded after the March 2020 Covid-19 crash, in part because the U.S. government quickly stepped in to stimulate the economy, unclog the debt markets and slash interest rates. This time, America's leaders, and their tariff plans, are the root cause of the selloff.

"It was pretty shocking," Danny Kirsch, head of options at Piper Sandler, said of the trade levies. "This is much higher than the market expected."

Some investors are betting that the Federal Reserve will cut interest rates in response to a slowing economy this year. Still, high prices as a result of tariffs could put the central bank in a tricky spot.

Investors know how to navigate most market-moving events, such as a Federal Reserve meeting or a report on inflation. The tariffs have been different.

"Nobody has a playbook anymore to go by," said Matthew Tym, head of equity derivatives at Cantor Fitzgerald.

Write to Gunjan Banerji at gunjan.banerji@wsj.com

(END) Dow Jones Newswires

April 03, 2025 10:07 ET (14:07 GMT)

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